By Jacob Shteyman in Canberra

The period of runaway rental prices looks to be over after rents grew at the slowest rate for the December quarter in six years.

Renters have struggled to keep up with surging housing costs since the COVID-19 pandemic but increasing rental stock and falling migration should help keep a lid on price growth.

While budgets remain stretched, rents grew at a much more subdued 4.8 per cent in 2024 compared to the 8.1 per cent rise the year prior.

The 0.4 per cent rise over the last three months was the slowest increase for the fourth quarter since 2018.

Since the onset of covid, rents have increased by 36.1 per cent across Australia, equivalent to the median household paying $171 extra a week, said CoreLogic economist Kaytlin Ezzy.

This has pushed renters to their financial limits.

“Rental affordability continues to be a significant drag on rental growth,” Ms Ezzy said.

The median renter was spending almost a third of their pre-tax income to service the median rent in September; the highest level since CoreLogic began tracking rental affordability in 2006 and easily above the 30 per cent threshold that defines rental stress.

“The net result has potentially seen some prospective renters delay their decision to leave the family home,” Ms Ezzy said.

“Others have looked to form larger share households as a way of distributing the additional rental burden, unwinding the previous shrinking in the average household size that was apparent through the early stages of COVID.”

Rental demand is also moderating due to easing net overseas migration, with levels expected to normalise around pre-COVID averages by 2026/27.

Meanwhile, investors are taking up an increasing share of new housing finance at 37.2 per cent, above the decade average of 34 per cent, suggesting the net supply of rental stock is set to rise.

“Together these factors have supported an easing in vacancy rates over the year, from a low of 1.4 per cent in November 2023 to 1.9 per cent at the end of 2024,” Ms Ezzy said.

“The national rental market has well and truly passed the peak of the recent rental boom.”

Regional rentals grew at 1.2 per cent over the quarter, outstripping capital cities which combined barely appreciated at 0.1 per cent.

Melbourne experienced the biggest quarterly slowdown, falling 0.5 per cent, while Sydney and Darwin declined 0.2 per cent.

Adelaide, Perth and Hobart all grew more than one per cent over the quarter, but the Tasmanian city remained Australia’s most affordable capital with a median rent of $554.